Summary Entrepreneurship Theory and Practice Book
Barringer & Ireland (2019) Entrepreneurship - successfully launching new ventures
Ilse Lampe, 2021
Inhoud
CHAPTER 1 Introduction to Entrepreneurship ............................................................................................................ 2
CHAPTER 2 Recognizing opportunities and generating ideas .................................................................................... 7
CHAPTER 3 Feasibility Analysis .................................................................................................................................. 10
CHAPTER 4 Developing an Effective Business Model ............................................................................................... 12
CHAPTER 5 Industry and Competitor Analysis .......................................................................................................... 15
CHAPTER 9 Building a New-Venture Team ............................................................................................................... 17
CHAPTER 10 Getting financing and funding .............................................................................................................. 19
CHAPTER 11 Unique Marketing Issues ...................................................................................................................... 22
CHAPTER 12 The importance of intellectual property ............................................................................................. 25
,CHAPTER 1 Introduction to Entrepreneurship
Introduction to entrepreneurship
● There is tremendous interest in entrepreneurship around the world
● Global Entrepreneurship Monitor (GEM) is a joint research effort that tracks entrepreneurship
● Of particular interest to GEM is total early-stage entrepreneurial activity (TEA)
● The GEM study also identifies whether its respondents are starting a new business to take advantage of an
attractive opportunity (most important) or because of necessity to earn an income (less important)
● One criticism of entrepreneurship, is that most new businesses fail → This is not true
○ The percentage of firms that do fail shows that a motivation to start and run a business isn’t enough
○ Motivation must be coupled with a solid business idea, good financial management, and effective
execution to maximize chances for success
Describe entrepreneurship, corporate entrepreneurship, and the characteristics of entrepreneurial firms
What is entrepreneurship and why is it important?
● Inventors and entrepreneurs differ from each other
● An inventor creates something new
● An entrepreneur assembles and then integrates all the resources needed— the money, the people, the
business model, the strategy, the risk-bearing ability — to transform the invention into a viable business
● Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to
resources they currently control for the purpose of exploiting future goods and services
● An entrepreneur’s behaviour finds him trying to identify opportunities and putting useful ideas into practice
● The tasks called for can be accomplished by either an individual or a group and typically require creativity,
drive, and a willingness to take risks
● Established firms with an orientation toward acting entrepreneurially practice corporate entrepreneurship
● All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial
● The position of a firm on this continuum is referred to as its entrepreneurial intensity
○ Entrepreneurial firms are typically proactive innovators and are not averse to taking calculated risks
○ Conservative firms take more of a “wait and see” posture, are less innovative, and are risk-averse
● One of the most persuasive indications of entrepreneurship’s importance to an individual or a firm is the
degree of effort undertaken to behave entrepreneurially
● Firms with higher entrepreneurial intensity regularly look for ways to cut bureaucracy
Discuss three main reasons people decide to become entrepreneurs
Why do people become entrepreneurs?
● There are three primary reasons:
● Be Their Own Boss
○ This doesn’t mean that entrepreneurs are difficult to work with or that they have trouble accepting
authority
○ Instead, many entrepreneurs want to be their own boss because either they have had a long-time
ambition to own their own firm or because they have become frustrated working in traditional jobs
○ Some entrepreneurs transition from a traditional job to owning their own business more gradually
○ By starting a business part-time individuals can gain valuable experience, tuck away the money
they earn, and find out if they really like the business before deciding to leave their job
● Pursue Their Own Ideas
○ Some people are naturally alert, and when they recognize ideas for new products or services, they
have a desire to see those ideas realized
○ Corporate entrepreneurs who innovate within the context of an existing firm typically have a
mechanism for their ideas to become known
○ Established firms often resist innovation, and employees are left with good ideas that go unfulfilled
○ Because of their passion and commitment, some employees choose to leave the firm employing
them in order to start their own business as the means to develop their own ideas
○ Many entrepreneurs experience tremendous satisfaction when their entrepreneurial idea catches
on, and they see the positive results it creates
● Pursue Financial Rewards
○ This motivation, however, is typically secondary to the first two and often fails to live up to its hype
○ Most entrepreneurs do not earn more than someone with the same responsibility in a traditional job
, Identify four main characteristics of successful entrepreneurs
Characteristics of successful entrepreneurs
● Although many behaviours have been ascribed to entrepreneurs, several are common to the successful ones
● Those in new ventures and those who are already part of an entrepreneurial firm share these qualities:
1. Passion for the Business
● Frequently, it’s the passion for an idea that gets a business going and keeps it going when times are tough
● Making a difference in people’s lives is the primary motivator behind many social enterprises, which are
often started by people who set aside promising careers to pursue a social goal
● Each of these reasons reflects a personal attribute that passion engenders
● Removing just one of these qualities would make it much more difficult to launch and sustain a successful
entrepreneurial organization.
● A note of caution: While entrepreneurs should have passion, this is not the only thing they need
● Instead, your passion should be consistent with your skills and it should be in an area that represents a
legitimate business opportunity
2. Product/Customer Focus
● The two most important elements in any business are products and customers
● While it’s important to think about management, marketing, finance etc. none of those functions makes
any difference if a firm does not have good products with the capability to satisfy customers
● “Everything we build has to provide real value to both our users and customers”
● The best measurement of whether you are successful at delivering something valuable is if our customers
are willing to pay
● A product/customer focus also involves the diligence to spot product opportunities and to see them
through to completion
3. Tenacity Despite Failure
● Because entrepreneurs are typically trying something new, the possibility of failure exists
● Developing a new business idea may require a certain degree of experimentation before success is
attained
● The litmus test for entrepreneurs is their ability to persevere through setbacks and failures
● Entrepreneurs should also have tenacity to overcome personal obstacles along with professional ones
4. Execution Intelligence
● The ability to fashion a solid idea into a viable business is a key characteristic of successful entrepreneurs
● This ability is thought of as execution intelligence, and it is often the factor that determines whether a
start-up is successful or fails
● The ability to effectively execute a business idea means developing a business model, putting together a
new venture team, raising money, establishing partnerships, managing finances, leading employees etc.
● It also demands the ability to translate thought, creativity, and imagination into action and measurable
results
● One way early-stage companies learn execution intelligence is by participating in start-up incubator and
accelerator programs
, Explain five common myths regarding entrepreneurship
Common myths about entrepreneurs
● There are many misconceptions about who entrepreneurs are and what motivates them to launch firms to
develop their ideas
● Some misconceptions develop because of the media covering atypical entrepreneurs
● Myth 1: Entrepreneurs are born, not made
● This myth is based on the mistaken belief that some people are genetically predisposed to be
entrepreneurs
● No one is “born” to be an entrepreneur and that everyone has the potential to become one. Whether
someone does or doesn’t is a function of environment, life experiences, and personal choices
● However, there are personality traits and characteristics that are commonly associated with
entrepreneurs
○ E.g. being creative, energetic, self-confident, visionary, decisive
● Myth 2: Entrepreneurs are gamblers
● A second myth about entrepreneurs is that they are gamblers and take big risks
● The truth is, entrepreneurs are usually moderate risk-takers, as are most people
● The idea that entrepreneurs are gamblers originates from two sources
○ First, entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set
of possibilities than managers or rank-and-file employees
○ Second, many entrepreneurs have a strong need to achieve and often set challenging goals, a
behaviour that is sometimes equated with risk-taking
● Myth 3: Entrepreneurs Are Motivated Primarily by money
● It is naïve to think that entrepreneurs don’t seek financial rewards
● However, money is rarely the primary reason entrepreneurs start new firms and persevere
● Myth 4: Entrepreneurs should be young and energetic
● Entrepreneurial activity is fairly evenly spread out over age ranges
● The percentage of owners is quite evenly distributed across 4 major age categories
● The majority of business owners have work experience prior to launching a new venture
● Although it is important to be energetic, investors often cite the strength of the entrepreneur (or team of
entrepreneurs) as their most important criterion in the decision to fund new ventures
● “We would rather fund a strong entrepreneur with a mediocre business idea than fund a strong business
idea and a mediocre entrepreneur”
● What makes an entrepreneur “strong” is experience in the proposed business, skills and abilities that will
help the business, a solid reputation, a track record of success, and passion about the business idea
○ The first four of these five qualities favor older rather than younger entrepreneurs
● Myth 5: Entrepreneurs Love the Spotlight
● Some entrepreneurs are flamboyant; however, the vast majority of them do not attract public attention
● Many entrepreneurs, because they are working on proprietary products or services, avoid public notice
Describe the three types of start-up firms
Types of start-up firms
● There are three types of start-up firms:
